Kia 2005 Annual Report Download - page 75

75
2005 Annual Report
Fixed Assets
With regard to fixed assets, investm ents totaled ￦2,333 billion, an increase of ￦356 billion over 2004. We changed our evaluation m ethod for our INI Steel shares
from the market value method to the equity method, w hich resulted in a ￦228 billion of reduction in the book value of the long-term investm ent securities from
the previous year. Meanw hile, the application of the equity method allow ed us to realize total gains of ￦549 billion with regard to KIA’s stakes in Hyundai Mobis,
Wia, and Kia Motors Slovakia, etc (in which we had invested a certain or total sum of paid-in capital).
Tangible assets for 2005 am ounted to ￦5,233 billion, a ￦258 billion increase over the previous year; this resulted from investm ents relating to new vehicle
developm ents including new Pride, new Carnival, and Lotze, as w ell as investm ents in new engine and transm ission factories.
Intangible assets increased by ￦152 billion com pared to the previous year due to increases in capitalization of R&D expenses required for the roll-out of new
models such as new Carens and m id-large SUVs.
Liabilities
Current Liabilities
Despite the increase in the production and sales of com pletely built-up vehicles, the trade payables turnover period decreased slightly due to a increase in 100%
cash payment for material costs related to export vehicles; this means that the trade payables figure reached ￦1,969 billion, a sim ilar level to the previous year.
Short-term borrow ings w ere ￦313 billion, a ￦59 billion decrease from the previous year mainly due to a ￦50 billion reduction in com mercial paper issues. The
amount of current debentures and long-term borrow ings that matured in 2006 was ￦259 billion, a similar level to 2004. Other payables also decreased by
approxim ately ￦60 billion over the previous year; this resulted from low er incom e tax payable due to a reduction in 2005 taxable incom e, etc.
Non-current Liabilities
Total debentures rose by ￦515 billion over the previous year. This was m ainly due to the issue of 0.6 billion in corporate debentures and the reclassification of
debentures m aturing w ithin 1 year into the current debenture account. Approximately 116 million in foreign borrow ings were raised for the establishm ent of
overseas factories, but with the early repaym ent of ￦220 billion of the reorganized debts under court receivership and the valuation gains due to exchange rate
depreciation, etc, our long-term borrowings decreased by ￦102 billion com pared to 2004.
Despite the increase of units in operation (UIO) to keep up w ith increased sales volum e, short and long-term warranty provisions declined by ￦40 billion, which
reflected globally improved quality level of our products and the fall in foreign currency reserves, which takes up more than 80% of warranty provisions.
Equity
As of the end of 2005, total equity was ￦5,252 billion, an increase of ￦288 billion over the 2004 figure.
Retained earnings increased by ￦560 billion. And while net incom e was ￦681 billion, ￦121 billion was paid out in dividends to our shareholders. Capital
adjustm ents declined by ￦179 billion. There were tw o reasons for the decline in capital adjustm ents. First, the switch to the equity method with regard to our INI
Steel shares reduced the gains in the valuation of long-term investm ent by ￦91 billion. Second, the sw itch to the equity method led to lowering equity valuation
amount by ￦178 billion, resulting from Hyundai Motor Com pany and Hyundai Mobis shares held by INI Steel.
• Liability/Equity • Debt/ Total Assets
2003
129.1%
2004
115.2%
2005
114.0%
2003
20.7%
2004
15.8%
2005
18.2%